Report: Market Will Prosper Under Ability-to-Repay, QM Rules

The less involvement in private business the Government has the better. That being said this rule just seems like common sense. As long as the requirements for loan approval are not out of line, and these seem to be basically OK, then they should not hurt the housing market in the long run. For a more detailed look at this subject please read the article below.

Today’s resilient capital market has the capacity to adapt readily to the pending Ability-to-Repay and Qualified Mortgage (QM) rules set to take effect January 10, 2014, according to a white paper CoreLogic released Friday.

The Ability-to-Repay rule requires lenders to take eight borrower attributes into consideration: “borrower’s current income or assets; current employment; the monthly payment for the loan, as well as any other loans secured by the same property; monthly payments for property taxes and insurance for which the borrower is responsible; current debt obligations; the borrower’s monthly debt-to-income ratio or residual income; and credit history,” CoreLogic explained.

A “Qualified Mortgage” meets a set of standards that provide “safe harbor” for lenders. These mortgages are automatically considered to be compliant with the Ability-to-Repay rule.
“To be QM-eligible, a loan has limits on points and fees to be paid, as well as underwriting features allowed,” CoreLogic stated.

For the first seven years under the new regulations, loans that meet the purchase requirements for the GSEs, or the underwriting standards for the Federal Housing Administration, the Veterans Administration, or the U.S. Department of Agriculture, “fall into a temporary exemption and are considered QM as long as the loan provides for no interest-only payments, has a term that does not exceed 30 years, and meets the QM limitations on points and fees,” CoreLogic stated in its white paper.